green@work : Magazine : Back Issues : Mar/Apr 2003 : WEF Vs. WSF

World Economic Forum Vs. World Social Forum

by John Elkington and Seb Beloe

WEF: The Defending Champion

Editor’s note: In 2003, SustainAbility participated in both the World Economic Forum (WEF) in Davos, Switzerland and the World Social Forum (WSF) in Porto Allegre, Brazil. John Elkington, co-founder and chairman of SustainAbility, went to WEF in Davos, where he was a panelist in three sessions; Seb Beloe, a director at SustainAbility, went to Porto Alegre, where the firm co-hosted a session on its NGO research with the United Nations’ Global Compact Office. The following article provides their views of how it went in the third round of the title fight. For more information on WEF, visit www.weforum.org. For more information on WSF, visit www.forumsocialmundi al.org.br/home.asp.

The first thing that struck me about the WEF meeting in Davos was a profound shift in mood since January 2002. In New York, the focus had been on the 9-11 attacks and their immediate aftermath. Just a few months after those terrible events, America was still seen as the victim. This year, by contrast, there were fewer Americans—and they were under intense pressure because U.S. forces were massing for the much-heralded attack on Iraq.

Whatever one may think about Saddam Hussein or about the proposed war, many WEF speakers—particularly those from the NGO world—were opposed. To applause, Kumi Naidoo, CEO of the NGO umbrella organization Civicus, challenged the views of U.S. Attorney-General John Ashcroft that “terrorism is an attack on the rule of law.” Ashcroft and his colleagues were adamant that Iraq was a fair target, whereas Naidoo argued that terrorism doesn’t happen in a vacuum. “People need to feel they have an economic, a political and a cultural stake in the planet,” he said.

How have the big issues changed?

Whether a given session focused on Iraq, HIV/AIDS or competitiveness, however, we kept returning to the theme of the 2003 WEF meeting: Building Trust. When Klaus Schwab kicked off the Davos event, he stressed that “never before in the 33 years of the World Economic Forum’s history has the situation in the world been as fragile, as complex and dangerous as this year.”

Trust, he said, “is the foundation of all personal relationships. It is the foundation of all business. It is the foundation of all international relations. In our increasingly interconnected world, trust is the rock on which we all depend.”

Unhappily, as he and others pointed out, levels of trust are declining worldwide. Much reference was made to the results of a 2002 survey, designed by Environics International (www.environics international.com), carried out by Gallup International (www.voice-of-the people. net) and launched by WEF. Polling 36,000 citizens in 47 countries on six continents, the survey was billed as representative of 1.4 billion people—and the results showed that trust was lowest in national legislative bodies and in large companies.

Climate change was a major issue again this year, although panellists in one session chaired by Eileen Claussen, president of the Pew Center on Global Climate Change, concluded that the environment is increasingly taking something of a “back seat”—overtaken by such issues as recession, war and HIV/AIDS. Last year’s World Summit on Sustainable Development, said Jonathan Lash, president of the World Resources Institute, had been seen as pretty much “an irrelevance and pushed aside.” But new evidence suggests “abrupt climate change” could produce impacts far greater than most people yet imagine, warned Robert Gagosian, president of the Woods Hole Oceanographic Institution.

How does WEF see WSF?

I didn’t ask Klaus Schwab this question directly, but as the “defending champion,” it’s easy to imagine that many at WEF see the WSF folk as interlopers, upstarts. When you’re 33, a three-year-old doesn’t feel like much of a threat. But WSF, despite its teething problems, is proving to be a pretty energetic challenger even so.

I suspect that many of the more traditional corporate WEF supporters still think that the decision to let in more NGOs to the Davos event in the wake of 1999’s “Battle of Seattle” was a strategic mistake. And the fact that there was a serious falling out between WEF and Friends of the Earth in the closing hours of the summit probably confirmed their fears. But the pressures to forge connections between WEF and WSF are growing.

Many NGOs I talked to in Davos stressed that they also had people (and generally more of them) in Porto Alegre. Most say they intend to build stronger links in future years. But, interestingly, these are also pretty competitive organizations. A few of the longer-established NGOs, behind the scenes, expressed real concern that they had let the WSF initiative explode into a niche which “should have been theirs.”

Is the gap closing or widening?

If you’re an optimist, the gap is closing—in that WEF has made huge strides to address many of the issues that are now central to the WSF agenda. Brazil’s President Luiz Inácio Lula da Silva was the strongest bridge by far between the two events, but even he noted that he had to defend his decision to come to Davos. The best long-term outcome would be a progressive convergence between WEF and WSF, since neither can achieve a knock-out.

But there’s still plenty to be pessimistic about. I sat in more than one session where corporate leaders—including leaders of much-attacked companies—sounded remarkably complacent about the challenges they face in relation to sustainable development. And on the challengers’ side, there are major hurdles to overcome before real convergence is likely. WSF is still pitched as an “anti-Davos” event—and WEF is building a series of initiatives (including its “Global Leaders of Tomorrow” and “Social Entrepreneurs” programs), which might just conceivably be used to outflank WSF. To ensure this doesn’t happen, WSF is going to have to come up with a coherent, pragmatic and saleable agenda—and fast.

What was the mood in Davos?

Gloomy. The looming war clouds spawned sessions focusing on everything from what would happen if someone launched a nuclear warhead to the possible impacts on U.S. brands of Muslim boycotts. And, as if war was not enough, a deep pall had been cast by the collapse of the New Economy, the global recession and the recent corporate scandals in the U.S.

We didn’t hear much about silver linings, either. Hewlett-Packard chief executive Carly Fiorina argued that the technology industry would never regain the momentum it had gained in the 1990s. Interestingly, an unexpected star of the event was Cristobal Conde, CEO of the U.S.-based SunGard Data Systems, one of the world’s largest suppliers of backup equipment for computer systems. A clear beneficiary of turbulent times, he popped up on panels with titles like “The Occurrence of Another 9/11 and Its Impact on Business.”

Some folks, though, simply didn’t show. The media and entertainment worlds, for example, were conspicuous by their absence. “Davos is a mogul-free zone,” was the way the International Herald Tribune put it. It also quoted Sir Howard Stringer, chief executive of Sony Corp. of America, to the effect that this year’s WEF agenda was to blame: “The two themes of this year are rebuilding trust in business and the war in Iraq. That’s not exactly cheerful.”

Which were the most interesting voices?

Davos is still largely white men over 50, as various women whispered in my ear as we listened to one all-male panel after another. Among the big political guns, there’s no question that former U.S. President Bill Clinton still wins in the charisma stakes. Indeed, one of the most memorable sessions was a late-night discussion between Clinton, José Maria Figueres, former president of Costa Rica (now WEF managing director) and Ernesto Zedillo Ponce de Leon, former president of Mexico.

The discussion gave an extraordinary insight into how the near-meltdown of the Mexican economy was avoided by Clinton’s bold $40 billion loan, despite U.S. opinion polls running 80:15 percent against. But how long will we have to wait before we see similarly-inspired leadership in relation to the sustainable development agenda?

While the three ex-presidents often looked to the past, even if they were seeking lessons for the future, others had their eye firmly on the emerging agenda. Brazil’s President Lula, for example, is very much a rising star. He was in no doubt about the need for closer WEF-WSF links. “I think the people in Davos should talk to the people in Porto Alegre,” he said. “It is like management and unions that seem to be far away in contract talks. But when you sit down, the distance doesn’t seem so huge.”

Among other things, Lula’s call for the Group of Seven rich countries to support a new fund to tackle developing world poverty was greeted with a degree of scepticism by business people, but signalled his desire to give Brazil a much bigger role on the international stage.

And the international stage is likely to see much drama, if you believe WEF 2003. For example, people like George Soros argued that China could impact the global economy as “a deflation machine,” driving down the costs of production and, in the process, adding to existing deflationary pressures.

For me, though, the most interesting voices in Davos were often those of social entrepreneurs. Each year, the Schwab Foundation for Social Entrepreneurship, created by Klaus and Hilde Schwab (www.schwabfound.org), selects a number of individuals and organizations involved in “social transformation.” Among the selection criteria: innovation, sustainability, reach and scope, and replicability/ expandability. Indeed, when I facilitated a WEF session on “When Markets Fail, Who Responds,” one of the big questions that surfaced was how such social entrepreneurs can be helped to scale up their operations and impacts.

Where’s the agenda headed?

There had been six major streams of work through the meeting, each of which was asked to boil down its side of the agenda to just five priorities. On the final morning, the resulting 30 priorities were to be further distilled into five overall priorities. But the process went even further, resulting in just three WEF priorities for the coming year:

* Values: Trust, it was argued, could not be rebuilt simply by developing new rules and standards. Instead, it was argued, business needs to go much deeper, focusing on principles and values. Interestingly, too, was a strong sense that these values would need to be externally driven, with key roles for NGOs and governments in pushing things forward and ensuring a moderately level playing field. There remained significant differences between the Americans and Europeans, however, on where to go next on corporate governance.

The corporate panellists in the final “New Agenda” session were pretty much in agreement on this one. Values, said Boeing chairman and CEO Philip Condit, are “absolutely crucial within a company, within an economy, for building trust.” Lafarge chairman and CEO Bertrand Collomb stressed that what is now needed is a new focus on global governance. And Pfizer chairman and CEO Henry McKinnell also underscored the need to focus on principles and values, which he argued promote principled behaviour and creative solutions, rather than rules and regulations, which he said promoted a “race to the bottom.”

* Volatility and risk: At times the profusion of risks discussed was dizzying. Bill Clinton noted that, with more weapons than food, North Korea was using its missiles and bombs (some of them possibly nuclear) as “cash crops.” In parallel, too, there was a sense that business now faces an unparalleled convergence of political, social and economic risks. In the past, companies had tended to get into trouble because they have been “in the wrong place at the wrong time.” Today, by contrast, the risks are systemic—and the solutions will need to be systemic, too.

Threats like those posed by HIV/AIDS are set to take the guts out of the economies of many African countries, said Pfizer’s McKinnell, by removing many of the best-trained adults. “This is our Holocaust,” argued actress Julia Ormond (co-chair of FilmAid International) of HIV/AIDS, accepting one of two annual Crystal Awards from Klaus Schwab. She noted that the disease was set to kill more people than World War I, World War II and the bubonic plague combined.

* The corporate role in sustainable development: Given the relatively weak political impact achieved by the 2002 World Summit on Sustainable Development, it was interesting to see that sustainable development (SD) was seen as central—and the consensus at Davos 2003 was that business has a critical role to play in making it happen. The links between the SD agenda and global security were seen to be direct and increasingly urgent. Indeed, panellists from around the world used words like “stakeholder” and “sustainability” with an abandon that would have been unthinkable a few years back.

As the closing session moved to its conclusion, mine was among a small forest of arms raised when a final round of questions was invited. I didn’t get to ask my question, but it was a simple one. Like most participants, I found the three priorities intellectually satisfying, but also wondered what panellists like Collumb, Condit, Figueres and McKinnell wanted to see happen in the next 12 to 18 months. What key performance indicators would they use to judge progress by the 2004 and 2005 WEF meetings?

To answer my own question, I would want to see four things by January 2005:

* clear targets set by all companies and governments involved in Davos;
* much stronger links with the WSF community, including joint sessions on major issues, possibly mediated by President Lula da Silva;
* a major new focus on what can be done to help scale up the work of the social entrepreneurs spotlighted and networked by the Schwab Foundation and others; and
* a new stream of activity focusing on business models designed in line with the principles of corporate citizenship and sustainable development.

WSF: The Challenger -